This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS BRASILIA 003251 
 
SIPDIS 
 
SENSITIVE 
 
USDOC FOR 4332/ITA/MAC/WH/OLAC/JANDERSEN/ADRISCOLL/MWAR D 
USDOC FOR 3134/ITA/USCS/OIO/WH/RD/DDEVITO/DANDERSON/EOL SON 
TREASURY FOR TVARDE 
STATE PASS EXIM FOR FIRESTONE 
MONTREAL FOR USICAO 
 
E.O. 12958: N/A 
TAGS: EFIN EAIR EIND ETRD KTIA BR
SUBJECT: BRAZIL - CAPETOWN CONVENTION ACCESSION LIKELY IN 
MEDIUM TERM 
 
REF: STATE 199212 
 
¶1. (U) Econoff made reftel points on the Cape Town 
convention to Michel Arslanian of the Foreign Ministry's 
Division of Services, Investment and Financial Affairs. 
Arslanian stated Brazil will likely accede to the treaty, 
but with a few reservations since certain points of the 
treaty were "incompatible" with Brazilian law.  Arslanian, 
who was not versed in the technical aspects of the treaty, 
did not describe what the reservations might be. 
 
¶2. (SBU) Marcus Tollendal of Brazilian aircraft manufacturer 
Embraer, which has been lobbying the GoB in favor of 
accession to Capetown for some time, shared with Econoff in 
a December 13 conversation his assessment that the GoB would 
eventually accede to the convention.  Brazil's major 
airline, VARIG, which is currently under bankruptcy 
protection and under threat of having its aircraft seized by 
its creditors, was opposing Brazil's accession, according to 
Tollendal.  Embraer had sought to involve Brazil's solvent 
airlines, TAM and GOL, in the political dialogue since they 
stood to benefit from reduced financing costs should Brazil 
accede to the treaty.  While the Civil Aviation Directorate 
initially was opposed, its position appears to be changing. 
Tollendal believed the balance of forces was shifting in 
favor of Brazil's accession but did not think this would 
happen in the near term. 
 
¶3. (SBU) Of more concern, Tollendal said, were the likely 
GoB reservations, which would affect the implementation in 
Brazil of central aspects of the treaty.  There were 
restrictions under Brazilian bankruptcy law that limited a 
creditor's ability to seize assets, he explained.  While 
Embraer's lawyers were still drafting an opinion on the 
issue, accession with the significant reservations the GoB 
was entertaining would, Tollendal maintained, significantly 
weaken creditor rights to repossess aircraft from the ideal 
laid out in the convention.  He was uncertain, without 
seeing the final legal opinion, whether there was any basis 
for an accession without reservations. 
 
CHICOLA